Creative Destruction and the Future of the Software Industry

The open-source revolution has its roots in an old free-market process.

The way that software is being produced and acquired is changing rapidly. The availability of high quality software, often for no licensing costs and with very user-friendly license terms, is challenging commercial companies producing products in the same software category. This new type of software is called either Free Software or Open Source Software (it will be referred to in this document as Free/Open Source Software) and is being attacked by the incumbent software product vendors as if it were a threat to the free market itself. The software industry is actually going through a well-known free market process that was first identified by the famed economist Joseph A. Schumpeter in 1942. It is called the process of creative destruction.